Aspen board faces investor challenge

An investor revolt is looming at the diversified Perth-based property operation
Aspen Group
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On Friday the previous managing director, Angelo Del Borello, and the Perth-based Entrust Funds Management revealed they had boosted their stake in Aspen to above 5 per cent.

The move is a catalyst for change.

“We are in discussions with Aspen regarding the board composition of the group,’’ the managing director of Entrust Funds Management, David Franklyn, said.

The changes could involve the return of Mr Del Borello, the co-founder of the group, who stepped down in June last year to create what chairman Reg Gillard called “a more appropriate executive structure". At the same time, a number of investors are lobbying to replace Mr Gillard with the veteran property funds manager, Richard Colless.

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Aspen, capitalised at about $270 million, performed reasonably last year.

Its total return of about 11.4 per cent for the 12 months to December 31, was better than many property groups.

But a number of investors believe the well-capitalised group is falling behind its potential.

The stock is trading on a yield of about 13 per cent and at a discount of 30 per cent to stated net asset backing.

Aspen is a diversified operation with around $379 million of investment assets, including the Septimus Roe tower in Perth and a number of properties in Adelaide that are on the market.

It also has about $39 million worth of development sites. The key attraction is the funds management operation which has nearly $1 billion worth of assets.

Several Aspen investors, who also have positions in the funds, believe this business is not growing as it should.

Significantly, Aspen announced on Friday that its latest residential land syndicate, Enclave at St Leonards, which is in the Swan Valley near Perth, would proceed, having gained $8 million in subscription and a debt facility.

Aspen managing director Gavin Hawkins said the go-ahead would benefit Aspen in two ways.

The group would sell a non-core asset into the new fund and gain the “endorsement of the market for its ability to undertake residential syndication", he said.